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Managing Your Retirement Finances

Retirement is a journey, not a destination. It’s something you’re creating — and enjoying — with the decisions you make every day. 

Retirement planning doesn’t stop when you retire. Even if you’ve followed a plan to save for retirement, it’s equally important to have a plan that is designed to help meet your needs throughout your retirement. 

Your in-retirement plan should include your income plan – how you pay yourself in retirement – and your estate plan.

Generate income while making your money last

As you near retirement, your risk and comfort level may be changing. You may be thinking about balancing the need for continued growth throughout retirement with a desire to help protect your assets and generate income.

If you find that your risk mindset is shifting, it is important to review this and determine if adjustments are needed as you move closer to retirement.

Creating a retirement income plan can be a balancing act between drawing down your savings too quickly, risking outliving your savings, and spending your income too slowly and needlessly crimping your standard of living.

Withdrawing income

When creating a withdrawal strategy, consider the following:

  • Make sure you are withdrawing the right amount from the right accounts based on how long you think you might live, personal expenses, and income sources.
  • Keep your portfolio invested and diversified to give it the potential to keep growing.
  • Monitor your retirement income plan and make any withdrawal or spending adjustments as needed.
  • Determine when and how to tap into your Social Security benefits.
To learn more, consider visiting our Income in Retirement page.

Consider your Required Minimum Distributions

IRS regulations require that owners of retirement accounts — including IRAs and qualified employer sponsored retirement plans (QRPs) such as 401(k)s, 403(b)s, and governmental 457(b)s — must begin taking distributions annually from these accounts. These distributions are referred to as required minimum distributions (RMDs). Once you reach your required beginning date (RBD), you will start taking RMDs from any Traditional, SEP, and SIMPLE IRAs that you have, as well as from any QRPs left at former employers. The RBD is generally April 1 following the year you turn age 72. 

Reconcile your budget and cash flow

Creating and following a realistic budget can be essential when you’re retired. It helps ensure your money lasts as long as you will need it.

  • Understand your basic needs – the essentials – and consider providing for these needs with predictable sources of income, such as Social Security, pensions and annuities.
  • Plan for discretionary expenses and how you will fund them.
  • Consider further building your emergency reserve fund to cover possible new expenses, particularly in the areas of healthcare and long-term care.
  • Compare your spending strategy to your income strategy. Are they consistent with each other or does your spending strategy need to be adjusted to align with your retirement income?

If you have been retired for a few years, now is a great time to give your income and spending plans a check-up.

Estate Planning

Design a plan that can protect you, your spouse, and your heirs no matter what life brings. The benefits of a sound estate plan include:

  • Ensuring that your assets pass to your beneficiaries in the simplest, most tax-efficient manner
  • Ensuring that your assets will be well managed in the event of your incapacitation or death
  • Preserving your assets for future generations

If estate taxes are likely to cut significantly into the amount you're able to leave your heirs or beneficiaries, now might be the time to consider the tax benefits associated with charitable giving strategies if you haven't already.

  • Think about charitable organizations that interest you, as well as gifting strategies for your heirs, such as contributing to a grandchild’s Coverdell Education Savings Account (ESA) or 529 plan.
  • The Setting Every Community Up for Retirement Enhancement (SECURE) Act has changed the distribution options for certain beneficiaries who inherit an IRA on or after January 1, 2020. The beneficiary category will determine the options your named beneficiaries have for distributing the money.
  • Converting all or a portion of your QRPs or Traditional, SEP and/or SIMPLE IRAs (after two years from the date of the first deposit) to a Roth IRA (and paying the taxes on taxable amount in the year of the conversion) is another strategy to consider to pass assets tax-free to your heirs. Please note that once you convert, you can no longer recharacterize, or undo the conversion.
  • Insurance can also play an important role in your estate and retirement plans.

Successful estate planning involves a team of professionals: an experienced Estate Planning Attorney, a Certified Public Accountant, and a financial advisor you trust to help manage your estate and preserve and protect your assets. Wells Fargo has helped manage the assets for generations of families. For more information, call us at 1-866-246-5056.

Mapping your route through retirement

As you enjoy this new phase of life, you need to make sure your retirement plan allows you to focus on the things that are most important to you. Wells Fargo can work with you to identify issues and risks, develop strategies to address gaps and help you refine and update your in-retirement plan. 

We are here to help you take the steps that are right for you throughout your retirement. To get started, contact a Wells Fargo Retirement Professional today.

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